The S/NZX 50 index increased 66.61 points, or 0.8 per cent, to 8266.88. Within the index, 17 stocks gained, 29 fell, and four were unchanged. Turnover was $229 million.

A2 Milk led the benchmark index higher, rising 9.8 per cent to $12.90 as investors continued to rally behind the milk marketing firm after stitching up a supply arrangement with Fonterra and reporting stronger first-half earnings than anticipated.

The company's market capitalisation rose above $10 billion during the day, placing a bigger value on it than Fonterra's $9.77 billion, although at the end of trading a2 was worth $9.42 billion.

"At one stage we (the NZX 50) were nearer to 2 per cent - it shows how much of a swing it's been," said James Lindsay, a portfolio manager at Nikko Asset Management.

"Year-to-date the business (a2) has been a major contributor helping alleviate the rest of the market."

Fonterra units rose 1.2 per cent to $6.10, while a2's existing supplier Synlait Milk gained 1.5 per cent to $6.75, recovering some of Wednesday's selloff over the new arrangement.

Air NZ rose 1.2 per cent to $3 after the national carrier lifted its interim dividend, despite posting a 7.4 per cent decline in first-half earnings over rising fuel costs.

Fletcher Building gained 1.7 per cent to $6.50, recovering from a five-year low. SkyCity Entertainment Group, which is facing off with Fletcher over the escalating cost of building the Auckland international convention centre, fell 4 per cent to $3.87, the biggest decline on the benchmark index.

Tourism Holdings fell 2 per cent to $5.92, despite doubling first-half profit on its North American expansion and lower US tax bill.

Among companies reporting Friday, Port of Tauranga fell 0.4 per cent to $4.99, Comvita was unchanged at $8.38, Steel Tube fell 1.4 per cent to $2.06, Delegat Group gained 1.5 per cent to $7.62, and Summerset Group slipped 0.2 per cent to $5.81.